Tuesday, March 20, 2018

Russia Affirms Pledge to See OPEC Deal Through to the End

A strategy should be developed for period after March 2018
Energy Minister Alexander Novak says Russia is committed to seeing its pact with OPEC through to completion.

  • Moscow willing to prolong output cuts if necessary, Novak says
  • Russia open to discussing gradual phaseout when appropriate
Russia is committed to seeing its pact with OPEC through to completion, whether that means starting discussions about a phaseout at the next meeting in June or prolonging output cuts into 2019, Energy Minister Alexander Novak said.

“As soon as the ultimate goal of our deal is achieved -- which is the balancing of the market -- we will start considering gradual withdrawal,” Novak said in a Bloomberg television interview in Moscow. “That might start to happen starting with the third or fourth quarters,” and discussion of an exit strategy at the group’s next meeting in June can’t be ruled out, he said.

However, if the situation in the oil market required the deal to be extended into 2019 then Russia would agree to that, according to the minister. “We will act depending on the current situation,” he said.

President Vladimir Putin, who will rule Russia for another six years after securing a victory in Sunday’s election, has emerged as a global oil-market power broker after engineering Russia’s accord with the Organization of Petroleum Exporting Countries over a year ago. The partners started 2018 on a high as their success in clearing a chronic glut pushed Brent crude above $70.

That surge prompted speculation that they could start discussing phasing out the production cuts before the deal expires at the end of the year. More recently, signs of market weakness have reappeared amid booming U.S. shale output, raising questions about whether the deal would need to be extended into 2019.

Novak said he isn’t worried about the growth in shale oil, nor the possibility that the U.S. could overtake Russia as the world’s largest crude producer.

Right Timing

Signals from top OPEC supplier Saudi Arabia suggest little desire to end the deal with Russia early. Producers should keep cutting for the whole year, even if that causes a small supply shortage, the kingdom’s Energy Minister Khalid Al-Falih said last month. The nation wants higher prices to sustain it through a period of radical change to its economy and bolster the value of its state oil company prior to an initial public offering, according to RBC Capital Markets.

When the time is right to end the production cuts, it should be done gradually, Novak said, echoing comments from his Saudi counterpart earlier this month.

After disagreeing about the strength of supply and demand late last year, both OPEC and the International Energy Agency now forecast that the production cuts will succeed in eliminating the oil-inventory surplus this year, achieving the stated goal of the deal. That success would be due in large part to the collapse in Venezuelan production amid an economic crisis, which could even put the market decisively into deficit by the end of the year, the IEA said.

Russian oil companies, including leading producers Rosneft PJSC and Lukoil PJSC, raised concerns last year over the prospect of prolonged cuts. Yet Novak insisted there’s no disagreement between the state and the industry.

“Of course we listen to their point of view,” he said. “Everything we do is a consolidated approach aimed at attaining the ultimate goal.”
An Italian court in Milan, on Monday, postponed till May 14 the start of a trial of executives of Royal Dutch Shell, ENI and former Nigerian oil minister, Dan Etete, over alleged bribery in connection with the sale of an oil bloc owned by Malabu Oil.

Read more at: https://www.vanguardngr.com/2018/03/taraba-killings-buhari-heads-mambilla-plateau/
An Italian court in Milan, on Monday, postponed till May 14 the start of a trial of executives of Royal Dutch Shell, ENI and former Nigerian oil minister, Dan Etete, over alleged bribery in connection with the sale of an oil bloc owned by Malabu Oil. Dan Etete: Malabu bribery trial shifted till May Dan Etete: Malabu bribery trial shifted till May The case involves the 2011 purchase by Eni and Shell of Nigeria of Nigeria’s OPL-245 offshore oilfield – one of Africa’s most valuable oil blocs – for about $1.3 billion. Eni CEO Claudio Descalzi, his predecessor, Paolo Scaroni and several officials from Eni and Shell are among those who will face the judge. Eni — also charged with corruption in Algeria in a separate trial — and Shell stand accused of handing out bribes during the 2011 purchase of OPL245, an offshore oil bloc estimated to hold 9 billion barrels of crude, for $1.3 billion. Both companies deny the charges against them. “Eni expresses its full confidence in the judicial process and that the trial will ascertain and confirm the correctness and integrity of its conduct,” the Italian firm said in a statement. The agreement allegedly saw Nigeria’s former president Goodluck Jonathan and former oil minister Etete pocket bribes, according to corruption watchdog Global Witness. “Eni and Shell closed the deal with the government without the involvement of an intermediary. The money… was deposited into an account owned by the Nigerian government,” said Eni, which has regularly reaffirmed its trust in Descalzi. Descalzi made it clear last year that Shell and Eni had not been “involved in the government’s decision on how to use the money.” Shell also said it believed the judges would conclude there was no case against them, adding “there is no place for bribery or corruption in our company.” The 2011 deal with the Nigerian government aimed to end years of litigation over the OPL245 bloc between Shell and Dan Etete’s Oil and Gas Malabu company. Etete, a former Nigerian oil minister under the former military ruler, General Sani Abacha, appropriated the bloc in 1998, selling it to Malabu, a company he secretly owned. The license was subsequently revoked by the government and then transferred to Shell and then again to Malabu, resulting in major litigation. After taking office in 2010, President Goodluck Jonathan resumed negotiations on the highly coveted bloc. According to Global Witness, the deal resulted in $1.1 billion being paid into an account in London opened by government officials — and going directly to Etete — and $210 million to the government. Email exchanges between Shell management cited by Global Witness, and seen by AFP, suggest that Shell was aware the money was likely to be funnelled to individuals, including Etete and Jonathan. “Etete can smell the money,” a Shell official wrote in 2010, while another said, “the President (Jonathan) is motivated to see 245 closed quickly –- driven by expectations about the proceeds that Malabu will receive and political contributions that will flow as a consequence.” Nigeria’s anti-graft agency, the EFCC, filed corruption charges against Shell and Eni in March 2017, accusing 11 defendants, including Etete, of “official corruption” in connection with the deal. Current president, Muhammadu Buhari, has pledged to fight relentlessly against the “cancer of corruption” that plagues Africa’s largest oil producer. But in a letter leaked in February from Justice Minister, Abubakar Malami, to Buhari dating from September, the minister asked the president to interrupt the EFCC investigation. In the letter Malami expressed concern that the case did not contain enough evidence to bring the main defendants to justice and that a trial would be an embarrassment for the country and could put off potential investors. Global Witness called for justice, saying “$1.1 billion can help a lot of people in a country like Nigeria” where “80 percent of citizens live on less than two dollars a day” Milan prosecutors allege bribes were paid to win the license to explore the field, which has never entered into production. All the accused have denied any wrongdoing. A Milan judge ruled in December that the companies, along with present and past executives, would face trial.

Read more at: https://www.vanguardngr.com/2018/03/taraba-killings-buhari-heads-mambilla-plateau/

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